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Find out which business sectors and which areas of the UK pay late

Posted in June 2015

New data released by Experian reveals that businesses in the UK settled their overdue invoices on average 1 day faster than in the previous tax year. Overall North West based companies and food retailing businesses posted the most improved payment performance figures.

Nationally the average days past terms (DPT) companies took to pay invoices fell by 0.98 days to 23.86 during the year from 5th April 2014 to 4th April 2015.

As usual small businesses were the most prompt payers and the largest companies the slowest payers. Companies with 1 to 2 employees paid their invoices in 20.57 DPT. Companies with 3 to 5 employees posted the best improvement, settling their invoices 1.3 days quicker at 21.33 DPT. Sadly, the largest corporations, those with more than 500 employees or more, once again took the most time to pay their bills at 34.17 DPT, although this was down by 0.98 on the previous tax year and on a par with average improvement nationally.

Good news for your business?

It’s encouraging that businesses and companies of every size improved their payment performance in the last financial year. Yet even the fastest payers still on average pay way beyond terms and more needs to be done to tackle the culture of late payment in all UK business sectors. Cash flow is king, and extremely important to the health of any business, in particular medium and small sized businesses, late payment affects profitability and stunts growth, while causing a chain reaction that affects suppliers.

While it is positive news that invoices are being paid faster, payment a day earlier, when the average payment is 23.86 late will make very little difference to most businesses. Directors and business owners cannot afford to be complacent, they must monitor closely accounts and customers payment behaviour to identify at an early stage any potential problems. Many businesses also fail to make proper use of late payment legislation which has been designed to improve cash flow across the whole economy. The businesses that have implemented and make full use of the legislation have seen marked improvement in cash flow and reduced administration in chasing late paying accounts.

The National DPT figures

Business size

DPT 2014/15

DPT 2013/14

Change

Business size

DPT 2014/15

DPT 2013/14

Change

1-2

20.57

21.15

-0.58

3-5

21.33

22.63

-1.30

6-10

21.18

22.14

-0.96

11-25

21.59

22.23

-0.64

26-50

22.90

23.31

-0.41

51-100

23.88

23.87

-0.07

101-500

24.10

24.76

-0.66

501+

34.17

35.24

-0.98

National Average

23.86

24.84

-0.98

Across the Regions

Businesses based in North West England improved their payment performance by the greatest margins, paying overdue invoices 3.77 days earlier at 30.43 DBT. However, the North West remained the region that took the most time to settle its bills. Northern Ireland was the fastest region to pay its invoices with businesses paying on average 15.92 days past terms. There was also a decrease in the time taken to pay invoices by companies in Scotland, down by 1.63 days, reducing the average DBT to 22.03. The North East was the only region to see an increase the days it took to pay invoices, up by 0.42 days on average.

The Regional DPT figures

Business size

DPT 2014/15

DPT 2013/14

Change

Business size

DPT 2014/15

DPT 2013/14

Change

Scotland

22.03

23.67

-1.64

North East England

25.06

24.62

+0.43

North West England

30.43

34.21

-3.78

Yorkshire

23.74

24.60

-0.85

Wales

23.41

3.85

-0.44

The West Midlands

22.60

23.52

-0.92

The East Midlands

23.38

24.32

-0.94

Eastern England

26.23

26.81

-0.58

South West England

17.92

17.96

-0.03

London

28.27

29.25

-0.98

South East England

20.81

20.94

-0.13

Northern Ireland

15.92

16.98

-1.06

Industry payment performance

Food retailing companies improved their payment performance by the greatest margins in the year to April 2015 by paying invoices 3.14 days faster, reducing the average DBT in the industry from 30.58 in 2013/2014 to 27.43 in 20145/2015.

In the 2013/2014 tax year, the fishing, forestry and agriculture industry was top of the figures, on average only going 9.97 days beyond terms. In contrast the telecommunications and postal industry was bottom of the pile, taking 44.43 DBT to settle invoices.

Industry DPT figures

Industry

DPT 2014/15

DPT 2013/14

Change

Industry

DPT 2014/15

DPT 2013/14

Change

Extractive Industries

27.12

23.62

+3.51

Oil

17.93

17.36

+0.57

Building and Construction

21.17

21.66

-0.49

Chemicals Industry

19.90

20.96

-1.06

Diversified Industries

22.07

22.25

-0.18

Electricals

21.03

22.09

-0.94

Engineering

20.22

18.29

-1.93

Printing, Paper and Packaging

17.66

18.56

-0.90

Textiles and Clothing

24.23

26.54

-2.30

Breweries

19.92

16.53

+3.39

Spirits, Wine and Tobacco

10.22

8.94

+1.27

Food Manufacturing

20.88

22.77

-1.89

Pharmaceuticals

20.08

20.07

+0.01

Wholesaling

20.22

22.69

-0.37

Leisure and Hotels

28.85

34.27

-2.22

Media

24.03

25.43

-1.40

Food Retailing

27.43

30.58

-1.40

Non-Food Retailing

24.45

26.38

-1.86

Servicing and Repair

18.11

17.76

+0.35

Transport

23.61

27.26

-1.17

Utilities

27.37

26.83

+0.54

Postal and Telecommunications

44.43

44.76

-0.33

Agriculture, Forestry and Fisheries

9.97

10.43

-0.46

Banking and Financial Services

26.17

26.60

-0.43

Health and Household

23.56

23.08

+0.48

Business Services

22.64

22.94

-0.30

Hiring and Leasing

23.93

24.74

-0.87

Property

27.65

29.32

-1.74

Other Services

19.99

21.04

-1.05

Plastics and Rubber

22.47

23.00

-0.53

Insurance

20.92

21.90

-1.49

Information Technology

25.32

24.27

-1.05

Motor Traders

19.69

21.70

+1.05

What you can do to reduce the problems associated with late payment

Status check: Is the business you are about to supply who they say they are? Forty percent of the companies registered at Companies House never go on to trade. You should always verify a new customer’s details including the trading address before fulfilling any orders.

Credit check: Performing a credit check will allow you to make measured decision on the level of credit to extend, by analysing trading history and credit status.

Maintenance checks: Trading conditions and financial positions can change quickly, last month’s prompt payer could be faced with financial difficulty this month affecting your cash flow. Monitor and update your customers credit histories on a regular basis to identify problems before they happen.